Succession planning is the key to a happy exit and a sustainable legacy
What would happen to your business if you weren’t around to look after it? The chances are that there would be something close to chaos as, like many entrepreneurial businesses, your company relies upon your leadership. But many entrepreneurs are waking up to the advantages of succession planning. If formed correctly, a good succession plan allows you to move away from the day-to-day running of the business. And, when the time comes for you to retire from the company, you can do so safe in the knowledge that it is in good hands.
How to do it
Looking for your own replacement starts by examining the strengths and capabilities of your management team. If your business is to really grow you need to defer responsibility to others or you’ll create a bottleneck in the business. By the time you are ready to move from the position of managing director or chief executive into a chairman or presidential role you should have created several places (finance director, operations director and commercial director) where potential successors can get closer to the top. Therefore you should have plenty of time to assess the abilities, enthusiasm and aptitudes of your team. You can, of course, discuss the subject with them and see how they respond. Your opinion of who is best equipped to lead might change once the prospect is on the horizon.
What to look for
Some entrepreneurs considering succession planning think that they should look for someone who reminds them of themselves. However, this is often probably the wrong route to take. The skills required by a start-up entrepreneur are very different to those needed to manage an established business. Entrepreneurs are often poor managers and vice versa.
If you are considering bringing in a chief executive from outside the company then someone who has experience in your industry and of managing a comparable business is ideal. You’ll want to spend a good deal of time with them through interviews, presentations and probably a dinner or two getting to know them on a one-to-one basis.
Letting go
For many this is the hardest part. While there will be a hand-over period you also have to let them take over the business. If you are remaining as chairman you’ll want to be reported to, but, ultimately the day-to-day will be handled by someone else. You have to resist the temptation to meddle, although you can be there to offer advice when it is required.